Income inequality doesn’t happen by accident and it’s certainly not inevitable. It happens when economies and governments are structured to benefit a few people over everyone else.
Today, income inequality is soaring all around the world. Multinational industries are consolidating, tax havens are teeming, and corruption seems to be everywhere.
In perhaps the most jarring illustration of this imbalance yet, Oxfam recently showed that the world’s eight richest men own more wealth than the poorest half of humanity.
Together these men have a combined wealth of $426.2 billion, with an average wealth of $53.275 billion. The 3.6 billion poorest, meanwhile, have an average wealth of around $118.
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This comparison draws on data from Credit Suisse’s study of the world’s poor and Forbes’ annual list of the world’s wealthiest, both of which are based on publicly available information. But it’s likely that a lot of data concerning global wealth is either hidden or unobtainable, so the problem could be much more dire. As money flows around the world, financial manipulation and concealment are common. And, on the flip side, much of the world’s poor live outside of officially monitored areas.
Six of the richest men are US citizens — Bill Gates, Warren Buffett, Jeff Bezos, Mark Zuckerberg, Lawrence Ellison, and Michael Bloomberg. Carlos Slim is from Mexico and Amancio Ortega Gaona is from Spain.
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The US has the most billionaires in the world, followed by China, Germany, Russia, and the UK.
Meanwhile, the US has a poverty rate of 14.3%, which is more than 43 million people. China has a poverty rate of around 30%, or 400 million people.
The World Economic Forum recently found that average incomes are falling in the world’s richest nations, and income growth has stalled in developing nations. That doesn’t mean economies are shrinking, it just means wealth is being distributed unevenly.
Between 2009 and 2013 in the US, for example, more than 95% of newly generated wealth accrued to the top 1% of earners.
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As a result, the WEF calls for a rejection of the Growth Domestic Product as the universal measurement of an economy’s welfare, because it gives a skewed portrait of economic health. Instead, they call for using the Inclusive Development Index to better reflect how economies are working for the majority of people.
Since 2015, the richest top 1% has owned more wealth than the bottom 99% of the world's population.
— Bernie Sanders (@SenSanders) January 17, 2017
This growing split has caused unrest in the US, arguably leading to the populist insurgencies of Bernie Sanders and Donald Trump. But in a dark irony of that rage against the status quo, Donald Trump recently assembled the wealthiest cabinet in US history, and has essentially promised to deregulate Wall Street, which is a chief driver of inequality.
Looking beyond the US, 700 million people live on less than $1.90 a day. People everywhere are being displaced by economic, geopolitical, and environmental shifts. As automation rises around the world, wealth could concentrate even further.
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Oftentimes, wealth inequality is treated as a harsh but unavoidable reality of capitalism or “market forces.” But this is false. Extreme wealth inequality is both detrimental to an economy as a whole because it suppresses the economic potential of the vast majority of citizens and morally wrong as it unnecessarily subjects people to suffering.
In sketching a global picture of inequality, the World Economic Forum recommended a few commonsense reforms that would make economies work for more people.
These include (1) a progressive tax system and robust social safety net; (2) fair wages and job security; (3) supporting small business; (4) improving access to financial systems for regular people; (5) enforcing rules against corruption; (6) improving public infrastructure both physical and digital; (7) and investing in education and skills-training programs.
In their idealism, these goals will obviously butt up against the status quo of many countries, but that doesn’t mean they shouldn’t be pursued. When a handful of men have as much wealth — and power — as the bottom half of the world, change has to be insisted upon everywhere.
After all, the wealth of these men is not a sign of extreme talent; it’s a sign of profound political failure.